Briefing highlights

Juggling act

Now that the fun part’s over, Avery Shenfeld expects Doug Ford to begin his juggling act and calculate what Ontario can actually afford.

No easy task that, based on what we know and what the chief economist at CIBC World Markets said.

Ontario’s new Conservative Premier made a lot of promises in the election campaign, and, thus, has a lot to juggle. And remember, he has shared only some numbers with those who elected him.

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Can he deliver?

“Note that the Tories agreed that they will start with a deficit, but pledged a ‘return to a balanced budget in a responsible time frame,’” Mr. Shenfeld said.

“What remains to be seen is whether the tax cuts, or the deficit pledge, will take priority if there’s a conflict,” he added in a report that looks at the new government’s priorities as it starts its first full week in office.

“They already were expecting to defer items like income tax cuts into 2020/21. Look for the premier and his new team to get down to work soon on figuring out what Ontario can actually afford in terms of providing tax relief, shrinking government costs, while keeping its lenders happy.”

Here are Mr. Shenfeld’s thoughts, based on some numbers from the Conservative party campaign that included tax cuts and lower prices at the gas pump, plus the end of cap-and-trade money:

1: These promises “would on their own swing the province into a larger deficit.”

2: Remember that Ontario accounts for near 40 per cent of the country’s economy, so the Tory program “would add a hefty dose of fiscal stimulus that might push the Bank of Canada into additional rate hikes, but at the same time put downward pressure on the energy components of the [consumer price index].”

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3: Add it all up, and the new provincial government would forgo $1.2-billion in taxes at the pump, $1.3-billion in business taxes, and about $3-billion from what they take from me and you.

4: The proposed cut in power bills could skirt the deficit side of the ledger if it’s done in the same manner as the Liberals did it, via deferment.

5: “Revenues from a carbon cap-and-trade system would also vanish, but would be offset by cancelling the programs they funded.”

It may take Mr. Ford time to determine how to save without widespread layoffs among the civil service,” Mr. Shenfeld said.

“On deficits, Ford has given himself a lot of elbow room by saying that his first order of business will be to go over the books ‘line by line,’” he added.

“We’ve seen that movie before. A new party takes over, declares that the fiscal picture is ‘worse than we had been led to believe,’ and then opts to draw out the timetable for more expensive promises.”

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Mr. Shenfeld’s key point, he added later, is that “you can’t simply add these all up and say that the deficit is going to soar, because the Ford team has left itself an out in saying that the first order to business will be to go through the books and see where we stand, and will use the results of that to determine how quickly taxes can be cut (and savings found on spending) while meeting their objectives on the deficit.”

A scene I’d love to see

Enbridge sells assets

Enbridge Inc. is selling certain of its Alberta and B.C. assets to a group led by Brookfield Infrastructure for $4.3-billion in cash.

The deal involves Enbridge’s natural gas gathering and processing operations in the two provinces, which include 19 plants.

“When combined with asset monetizations announced in May, the sale of our Canadian [gas gathering and processing] business significantly advances our strategic priority of moving to a pure play regulated pipeline and utility business model,” Enbridge chief executive officer Al Monaco said in announcing the deal.

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